Vehicle Miles Traveled — Down 4.3 Percent

As the General Assembly gears up for a special session to hammer out a transportation-funding “solution,” you’ll hear a lot about the catastrophic decline in gasoline tax revenues. Because maintenance projects get first crack at all state gas-tax dollars, the plunge in revenues translates into a dollar-for-dollar reduction in construction spending. You’ll hear a lot of panicky talk about the cancellation of all sorts of highway projects, and dire predictions of how Virginians will be consigned to traffic-congestion hell.

But there’s a flip to the declining gasoline consumption and gas-tax revenues: People are driving less. Fewer people driving translates into less traffic congestion. In an economically rational world, a decline in traffic congestion would be reflected in scaled-back construction plans. This is not an economically rational world, of course. It’s a world in which a massive share of the economy is directed not by market forces but political forces. And it’s not in the interest of those who benefit from massive construction programs to tell the whole story. So, there’s a good chance you won’t see this information anywhere else.

Estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3 percent compared to March 2007, according to a Federal Highway Administration press release. The decline of 11 billion miles traveled that month was the sharpest year-to-year drop since the FHWA started tracking the numbers in 1942.

As a side benefit, fewer VMT means less air pollution. “Fewer cars on the road has translated into a 9 million metric ton decline in greenhouse emissions for the first quarter of 2008 alone,” writes Acting FHW administrator Jim Ray in the Department of Transportation’s Fast Lane blog.

In his blog post, Ray focuses on the fiscal downside. “The less revenue in the Highway Trust Fund, the less funding is available for states to keep roads healthy and efficient – resulting in more traffic tie-ups, more inefficiency, reduced driving and even less funding,” he writes. “This latest trend is yet another reason that we need to overhaul the highway financing system.”

We do need to overhaul the highway financing system to replace the gasoline tax, which will become increasingly obsolete over time. But here in Virginia we also need to re-examine assumptions on how much travel, and traffic congestion, are forecast to increase, and how much money we need to spend to address our need for mobility and access.

It would be farcical to pass a tax increase to compensate for declining Vehicle Miles Traveled and ensuing gas tax receipts without simultaneously taking a fresh look at the lower Vehicle-Miles-Traveled assumptions upon which Virginia’s highway-spending wish lists are based. But don’t expect it to happen. Politics is nothing if it is not a farce.

Update: What’s happening nationally may not be happening in Virginia. In the comments section of a previous post, “Bob” the blogger points to the March 2008 Commonwealth Transportation Fund Revenue Report , which indicates that the Motor Fuels tax in Virginia increased 4.4 percent in March. Something seems out of sync. Perhaps the difference between U.S. and Virginia trends can be attributed to differences in what is being counted or in methodology.

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  1. Larry Gross Avatar
    Larry Gross

    “Revenue collections declined by 2.3 percent in March, and on a year-to-date basis, growth
    is up 4.5 percent, ahead of the 4.0 percent annual target. The decline in monthly growth
    was mainly attributable to a 21.5 percent drop in motor vehicle sales tax.”

    “Motor Fuels Tax collections increased 4.4 percent in March. Annual collections through
    the first nine months of fiscal year 2008 are up 2.7 percent.”

    The revenues are DOWN even though the gas tax did not decrease.

    On the other hand.. it’s fair to say that the gas tax is not only generating significant increased revenues but it’s not even generating enough of an increase to offset the other losses.

    So.. the net result is less money for roads – more money being moved from construction to maintenance.

    I think Virginia’s reporting may be running behind the National data but time will tell.

    But here’s the deal.

    This is no more money for roads.

    repeat after me: – “there is no more money for roads”.

    we can argue about whether or not we need more.. but the facts are that revenue is flat and/or shrinking.

    we’ve got gasoline getting ready to top $4.. and starting to affect people’s commuting habits…

    you know.. the same one’s who had no choice but to drive solo to work… heckfire.. it turns out that they maybe didn’t have to drive solo in an SUV every day at rush hour… in the first place.

    at this point.. I’d not be surprised to see some toll companies bail out..also… although it’s kind of hard to believe that toll road investors who supposedly were looking ahead 50 to 100 years.. in terms of revenue projections… didn’t make some assumptions about the price of gasoline… in the same time frame.

    heck.. the way that things are going right now, in 5 years gasoline could be $10 a gallon and we’ll all be riding electric scooters.

  2. Larry Gross Avatar
    Larry Gross

    correction: “On the other hand.. it’s fair to say that the gas tax is not only NOT generating significant increased revenues but it’s not even generating enough of an increase to offset the other losses.”

    re: June 23

    the date of the special session I believe.

    You can bet – there WILL be a fresh up-to-date projection of VMT and number of gallons of gasoline purchased and the status of gas tax collections.

  3. Anonymous Avatar

    “But here’s the deal.

    This is no more money for roads.

    repeat after me: – “there is no more money for roads”.”

    But there will suddenly and magically be lots of new money for roads after we give a bunch of it to foreign toll road operators.

    And that money is going to magically appear, free, not going to cost any of us anything.


  4. Anonymous Avatar

    If estimated VMT keeps going down at that rate, then estimated congestion time delays should go down as well, along with estimated gas prices. And when we are all riding electric scooters, I estimate we won’t need any new roads.


  5. Anonymous Avatar

    “we’ve got gasoline getting ready to top $4.. and starting to affect people’s commuting habits…”

    And imagine what an additional fifty cent gas tax would do. It would affect EVERYBODY’s commuting habits, even those people who drive SOLO fifty miles each way down in Farmville.

  6. Larry Gross Avatar
    Larry Gross

    gee.. what happened to all those folks who had absolutely no choice but to drive solo SUVs because of their “work”?

    you mean all it took was a buck a gallon to change people’s minds?

    and my gawd… affordable housing.. what about all those folks who won’t be able to drive to their affordable homes now..

    does that mean they’re going to be moving back to NoVa and set up tent cities to live in?

    oh wait.. wait.. what’s that I’m hearing?? commuter buses? carpools, VRE, slugging, van pools, tele-commuting, 4 day weeks…

    gee.. at this rate .. $5 gaoline ought to work those “miracles” that RH is alluding to…


  7. Groveton Avatar

    “And imagine what an additional fifty cent gas tax would do. It would affect EVERYBODY’s commuting habits, even those people who drive SOLO fifty miles each way down in Farmville.”.

    Anon – you are missing the point. The goal is not fairness or less congestion or less pollution. It’s about taxing a very small percentage of the population (in NoVA) an obscene amount of money. It’s about pretending that congestion only exists on the I95 and the Beltway.

    I81 – no tolls
    Rt 3 – no tolls
    RT 64 – no tolls
    Rt 29 – no tolls


    Because they aren’t in NoVA. $1/mile tolls are for bridges, tunnels and NoVA. Maybe Tidewater. But not the center of the galaxy (i.e. Richmond). And not the bucolic nirvana of rural Virginia. You know – the vast lush green farms of Fredricksburg. No, no, no. Roads only cost money in NoVA (and maybe Tidewater). The gas tax (fixed at the same rate for 20 years) is fine everywhere except NoVA (and maybe Tidewater). Cars don’t pollute except in NoVA (and maybe Tidewater).

    Virginia has a long history of people saying one thing while believing something else entirely.

    “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness.”.

    Except women.
    Except slaves.
    Except indentured servants.
    Except people who don’t own land.

    “Everybody should pay their full location variable costs”.

    Except Richmonders.
    Except people from Fredricksburg.
    In fact, only people from NoVA (and maybe Tidewater).

  8. Darrell -- Chesapeake Avatar
    Darrell — Chesapeake

    What I’m seeing down here in Tidewater isn’t a reduction in commuting to a job. Nope, just like all the other news stories we have been hearing about, the consumer is cutting back on descretionary spending. Which means traveling other than getting to work is out the door. This past weekend the local tourist traps were complaining that their revenues were down 30 percent.

    So don’t expect congestion to decrease anytime soon. Rush hour will be the last thing to go. When it does, Watch out! The citizens are playing defense right now. Let’s hope they aren’t forced into an offense.

  9. Larry Gross Avatar
    Larry Gross

    I’m in favor of tolls anywhere citizens want new infrastructure but I also support citizen referenda to agree to raise their own taxes to pay for new roads.

    I don’t think it is politically viable to increase the gas tax to the level required to generate significant new money.

    It would take 20 cents to generate a billion of new money and I just don’t think there is support in the GA for a nickel much less a four-fold increase.

    so there is no poll that says:

    1. taxes
    2. tolls
    3. none of the above

    even though we rant on…

  10. The gas tax represents about one-third or maybe even one-fourth of what Virginia motorists pay in special taxes and fees (i.e. only levied on drivers) at the state and local level. So, even if the original premise that gas tax receipts were going down 5% were true, it would not be a catastrophic. E.g., a 5% drop in $919b is $45m. Out of $3.6 billion in state road expenses, that’s 1.2%. Give me a break — much less than 1% if you include local revenue collected by the personal property tax abomination. This jump to conclusions on the VMT release points out a real failure to look at the big picture with respect to toll roads and funding.

    The bottom line is that state transportation fund revenue is growing a bit in excess of the rate of inflation. It has done exactly that, year-on-year, for decades. Anyone bothering to look at the revenue charts could see this is true. The problem is really that without a catastrophe, it’s hard to drum up support for a drastic move like tolling every road. So, quick, people, come up with a crisis! The Australians are depending on it.

    “The gas tax (fixed at the same rate for 20 years) is fine everywhere except NoVA”

    The gas tax is only fixed for the saintly drivers of non-NOVA. Us evil northerners pay a 2% tax that increases the hit as the cost of gasoline skyrockets. Fairfax County stole* $200 million from drivers in FY2007. I bet they’re going to steal even more this year with that 2% tax taking double the revenue.

    * Steal defined as taking money in user fees and redistributing them to fund bureaucrat pay raises, the Taj Mahal government center, and whatever else Fairfax does with motorist money that has nothing to do with roads.

  11. Larry Gross Avatar
    Larry Gross

    The transportation revenues do grow by inflation but the cost of maintenance construction has gone up faster than inflation.

    To portray the VDOT budget as stable and growing by the rate of inflation implies that it is perfectly adequate.

    The Republicans in Va apparently believe this. Kaine and most of the Dems do not.

    I would posit that most folks in NoVa and HR/TW do not either.

    For the folks that don’t agree with the concept that the VDOT budget is just fine – the choices are:

    1. – increase the gas tax
    2. – toll some new roads
    3. – increase other taxes
    4. – a combination of all 4.

    Now.. if you happen to be a person who believes that VDOT’s budget is just fine and none of the 4 are needed, then congrats -your principles are totally consistent.

  12. Anonymous Avatar

    “I don’t think it is politically viable to increase the gas tax to the level required to generate significant new money.”

    Why is it viable in Europe and many other countries tha have MUCH higher fuel taxes than ours? And they don;t even pretend it is a user fee: it goes straight to the general fund.


  13. Anonymous Avatar

    “The transportation revenues do grow by inflation …”

    How has the gas tax increased with inflation?


  14. Anonymous Avatar

    Darrell is right. Discretionary travel goes first, after that, watch out.


  15. Anonymous Avatar

    1. – increase the gas tax
    2. – toll some new roads
    3. – increase other taxes
    4. – get more use out of existing underused roads
    5. – toll some existing roads
    6. – put roads on a parity with schools and pay out of the general fund.
    . – a combination of all 6.

    Plus a few others we haven’t thought of.


  16. Anonymous Avatar

    “I bet they’re going to steal even more this year with that 2% tax taking double the revenue.”

    Too bad we didn’t do that statewide, since 1987. Think of the money we’d have to spend.

    Oh, that’s right, I forgot. there is no money for roads.


  17. Anonymous Avatar

    Gasoline sales (# of Gallons sold)Gasoline sales reached 3.40 million gallons through October 2007, an increase of 2.4% from the same period of 2006.


  18. Anonymous Avatar

    I may have made an error.

    At current prices fuel sales could be up in terms of dollars and still be down in terms of gallons.

    This could account for some of the discrepancies we see.


  19. Anonymous Avatar

    This article describes a virtual collapse in the sales of large vehicles:

    But consumer reports tells us that trading in a large car could be a false economy .

    If you trade in your existing cr too early, you will take a big hit on depreciation, and lose the savings of operating it in later years. This can easily dwarf the saving you would make, even trading a gas guzzler for a Prius.

    There are many other factors involved, so see the consumer reports website before making any rash decision that will cost you more than they save.


  20. “At current prices fuel sales could be up in terms of dollars and still be down in terms of gallons.”

    That’s $600,000 worth of fuel tax in 2007, so it’s not a statewide figure. I suppose that means Virginia Tourism Centers sell gas and that their sales (in gallons) are up. Car traffic is up, too:

    nifty chart

  21. Groveton Avatar


    That is a nifty chart. Imagine if all the information maintained by the state of Virginia would be as accessible as this data. Wow.

    As for the elasticity of demand for gas – it’s been a while since I was taught economics by Ken Elzinga but here goes …

    Gas demand is inelastic. However, inelastic is a relative term. Perfect elasticity would relate to a product where an infinitesimal increase in cost totally eliminates demand. A perfectly inelastic supply/demand curve would result in the same demand for a product regardless of price. Of course, in the real world, product demand is neither perfectly elastic nor perfectly inelastic. An elasticity of 1 exists when a change in price results is a proportionate change in quantity bought/sold over the relevant range.

    Is gas inelastic?

    I would guess that the elasticity of gas is 0 < n < 1, where n = the price elasticity of demand. In other words, an increase of x% in price will result in less than an x% decline in demand. However, there will be a decline in demand as prices rise. What is the relevant range? This is the big question. Elasticity is only roughly linear over a short part of the curve. In order to make the point I’ll make an absurd argument. Assume gas costs $4 / gallon right now. Let’s say gas cost $1 per gallon. What would happen to demand? It would increase but it would not be 4X current demand. What if gas cost $16 / gallon? Demand would dampen but it would not be 1/4 of today’s demand. Substitution People react to the information conveyed in prices by changing demand. One aspect of consumer behavior is substitution. People react to higher prices by substituting one (less efficient) product for another (more efficient) product. In this framework, leisure/holiday activity is a broad product. Driving to the beach is one part of the product “go to the beach”. Driving to the community swimming pool is one part of a product called (my term) “stay at home vacation”. As fuel prices rise they create substitution in leisure/holiday activity. One example is the substitution of “stay at home vacations” in place of “drive to the beach”. Leisure/holiday consumption has a relatively more elastic demand than “engage in employment”. However, “engage in employment” is not perfectly inelastic either. Substitution will take longer but it will occur. Here are some substitutions and their implications: 1. Change in type of vehicle purchased. Consumers will substitute low gas mileage vehicles for high gas mileage vehicles. I think this is part of the dramatic slow down in new vehicle purchases. Consumers will not purchase another 15 mpg SUV or pick up truck. They want good gas mileage. But auto manufacturers don’t have an adequate supply of those vehicles available. 2. Beach front property becomes less valuable. Most beach front properties gain their value through a combination of the value the owner ascribes to being at the property him or herself and the value received by others who rent the property. Both components will fall in value as transportation costs increase and travel/leisure consumers find substitutes for higher cost, transportation heavy vacations. 3. There are many more implications.
    I have often written that escalating energy prices represent the single biggest challenge to the federal, state and local government. Not congestion, not gay marriage amendments, not gun control, not even the deficit. The biggest problem is energy and it is getting very limited attention from Virginia’s “political class”.

  22. Anonymous Avatar

    Hey all

    Interesting article about more people taking the bus and the result of adding more bus lines

    My question was who should pay for the expanded service. Looks to me like all of us are subsidizing those that chose to live far out and instead of facing the consequences are being bailed out by cheap bus service that deosn’t reflect the true cost of their commuting. I left a comment about increasing the cost of the fare for the bus route to help make up the cost of providing the service(you know user pays) and I got skewered.


    I also agree with Groveton. The GA actually passed a bill that prevents I-81 from ever being tolled without legislative approval. Meanwhile its perfectly fine to toll NoVa roads. A collective what the heck is in order.

    The bill is in response to the Virginia Department of Transportation’s recommendation to widen the interstate and possibly place tolls on it, reported The Associated Press on Thursday.

    The bill, Obenshain said, would give the communities along the Interstate 81 corridor a voice in the expansion of the highway.

    “This legislation is rooted in common sense and is intended to protect families from the burden of excessive tolls, to protect the agricultural character of the Shenandoah Valley and western Virginia and to protect our economy,” Obenshain said.

    Sen. Emmett Hanger, R-Mount Solon, supported the bill, whichpassed by a 37-1 vote.

    It appears that the Northern Virginia Legislators are too stupid to protect the people that live in their region. 37-1 thats insane.


  23. Anonymous Avatar

    No one, far out or close in pays bus fares that reflect the true cost.

    As more people take transit and fewer drivers are out ther footing the bill, we will have to face up to that fact, and it will be very uncomfortable for those who have been promoting the idea of saving money and the environment by using mass transit.

    Already, VRE would like to add two more trains, for which they have already have the cars.

    They don’t have the operating funds to do it, because the transportati0n bill was overturned.

    VRE was already standing room only, and they are now setting record ridership numbers.


  24. Larry Gross Avatar
    Larry Gross

    Quicks Bus Service – Commute With Us

    $130 Bi-Weekly, $190 Twenty Puch Ticket, $70 One Week, One-Way Fare $14.00 / Round-Trip $26.00

    buses – unlike VRE can easily form new routes… wherever there is demand.

    Quick buses hold 47 to 55 passengers.We maintain insurance coverage that exceeds insurance requirements in all 50 states

    contrary to many reports – the sky is not falling nor about to.

    getting out of one’s car and into a commuter bus ..does not constitute disaster…

  25. “That is a nifty chart. Imagine if all the information maintained by the state of Virginia would be as accessible as this data.”

    Yeah, politicians wouldn’t be able to ram unpopular policy proposals down our throats with bogus data anymore. You know, like claiming transportation revenues are imperiled by the commodities situation.

    Here are some more facts. According to 278 VMT reporting stations, total vehicle miles traveled in Virginia are in fact down this year.

    Table 5 from Excel spreadsheet of the FHWA data, Virginia only.
    March 08 vs. March 07: -3.3%
    February 08 vs. February 07: +1.7%
    January 08 vs. January 07: -2.5%

    So if we are to take all the data at face value, VMT is down while statewide gas tax revenues from the 17.5 cent per gallon tax (not including the 2% NOVA tax) are at all-time highs.

  26. Anonymous Avatar

    Quick Bus would do a lot better with 20 passenger buses.

    50 passenger behemoths should be outlawed.

    If someone wnats me to ride a bus, they need to have a serious talk with my boss, otherwise, it’s not ever happening on this job or for anyone who holds this job.

  27. Larry Gross Avatar
    Larry Gross

    I think the point is that Quick and other private providers of transportation will seek to provide what customers want…

    as opposed to having government spend other people’s money (taxpayer money) in pursuit of same…

    It may well turn out that smaller buses are more efficient but the best way to find out is to see what customers are willing to pay for.

  28. Anonymous Avatar

    “the best way to find out is to see what customers are willing to pay for.”

    So far, people are willing to ride transit if they only have to pay a third or less of the cost.

    They are willing to pay full cost for driving their cars AND pay the rest of the cost for transit riders.

    What does that tell you?

    At present we see a lot of new or aditional people choosing transit, because of increased gas costs.

    That means less people paying for transit who aren’t using it, and higher costs for transit operators.

    How long do you suppose it will be until the fares ans taxes for subsidies go up?

    How many places does Quick operate that are not subsidized?


  29. Larry Gross Avatar
    Larry Gross

    As far as I know, Quick is not subsidized

    Van Pools do get State-subsidized insurance…

  30. Anonymous Avatar

    Sounds a lot like paying people to car-pool.

  31. Anonymous Avatar

    They get subsidized indirectly through metro-checks.


  32. Larry Gross Avatar
    Larry Gross

    re: subsidized

    indeed they are…

    “Metrochek is a farecard voucher
    program provided as an employee benefit by more than 2,500 public and private employers in the Washington, D.C. area, including the federal government.

    Metrocheks are accepted by more than 100 bus, rail, and vanpool commuter services in the region, including Metro, MARC Train Service, Virginia Railway Express, and local bus systems. Metrocheks can be used as Metrorail farecards or as vouchers when purchasing fares for other transit services.
    The Metrochek transit benefit works just like many other commonly available fringe benefits such as employer-provided health insurance. Employees are not taxed for the value of the Metrocheks they receive, and employers can deduct the cost of providing the program as a business expense. The monthly Metrochek benefit can be any amount the employer chooses to provide, although a maximum of $105 per month is allowable tax-free or pre-tax to employees.”

    ….” from the IRS
    Q-1. What is a qualified transportation fringe?
    A-1. (a) The following benefits are
    qualified transportation fringe benefits:

    (1) Transportation in a commuter highway vehicle.
    (2) Transit passes [metrochek].
    (3) Qualified parking.
    (b) An employer may simultaneously
    provide an employee with any one or
    more of these three benefits.

    Q-2. What is transportation in a commuter
    highway vehicle?

    A-2. Transportation in a commuter
    highway vehicle is transportation provided by an employer to an employee in connection with travel between the employee’s residence and place of employment.
    A commuter highway vehicle is a highway vehicle with a seating capacity of at least 6 adults (excluding the driver)”
    Page 8

    which is pretty amazing.. when you think this is a benefit worth hundreds of dollars to not drive SOLO…

    so this could turn into a pretty good separate topic on BR…

    Not all employers offer this but it appears that the ones that do – get some compensation for doing it…

    and of course… it is a significant fringe for the employees of the companies that offer it…

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